May 6, 2014
by Jeffrey M. Knickerbocker
Hunt Leibert – USFN Member (Connecticut)
On April 15, 2014, the Connecticut Appellate Court released an opinion that limited a defendant’s ability to examine a pooling and servicing agreement. Wells Fargo Bank, N.A., Trustee v. Strong, 149 Conn. App. 384 (2014). In Strong, the defendant actually raised two challenges. The first challenge was as to the plaintiff’s standing when, allegedly, the plaintiff had not complied with its own pooling and servicing agreement (PSA). The second challenge was that the court should have held an evidentiary hearing with respect to the plaintiff’s debt rather than accept the plaintiff’s affidavit of debt.
In order to obtain judgment in this matter, the plaintiff filed a motion for summary judgment. The defendant claimed that the motion for summary judgment should have been denied because there was a genuine issue of material fact. The material fact, argued the defendant, was that the note did not contain the full chain of endorsement. The defendant also asserted that the assignment of mortgage presented a genuine issue of fact because it was more than two years after the actual assignment, and the assignment was from the servicer rather than the depositor.
According to the defendant, the PSA required that: (1) all transfers to the trustee under the agreement are to be made by the depositor; (2) any mortgage note in the mortgage pool that is transferred and delivered to the plaintiff must contain a complete chain of endorsement from the originator to the last endorsee; (3) all of the mortgage loans to be conveyed to the plaintiff under the agreement must be transferred concurrently with the execution and delivery of the agreement; and (4) the plaintiff’s rights and responsibilities as trustee are strictly limited by New York trust law and the “policy and intention of the Trust to acquire only Mortgage Loans meeting the requirements set forth in th[e] [a]greement ...” Id. at 389.
The appellate court affirmed the lower court’s ruling and denied the appeal. In denying the appeal, the court ruled, “The issue of whether a mortgagor may challenge a foreclosing party’s standing on the basis of its noncompliance with a pooling and servicing agreement, to which the mortgagor is not a party and in which such mortgagor has no legal interest, is one of first impression for our appellate courts. Nonetheless, our law with respect to foreclosure actions and third party beneficiaries provides us with a sufficient basis to conclude that the court did not err in granting summary judgment in the present action.” Id. at 390.
The court went on to state, “Our appellate courts have not required a foreclosure plaintiff to produce evidence of ownership deriving from a pooling and servicing agreement in making its prima facie case on summary judgment.” Id. at 399. Further, the court said, “plaintiff’s alleged noncompliance with the agreement did not impede the plaintiff’s ability to meet its burden of proving that it was entitled to summary judgment as a matter of law.” Id. at 401. Thus, the appellate court found that the lower court had properly rendered judgment in the plaintiff’s favor.
Likewise, the appellate court was not swayed by the defendant’s argument that the trial court should have had an evidentiary ruling in order to find the plaintiff’s debt. Connecticut rules specifically authorized a plaintiff to establish its debt using an affidavit. Connecticut Practice Book § 23-18 provides, in pertinent part: “(a) In any action to foreclose a mortgage where no defense as to the amount of the mortgage debt is interposed, such debt may be proved by presenting to the judicial authority the original note and mortgage, together with the affidavit of the plaintiff or other person familiar with the indebtedness ...” The defendant had failed to raise a defense regarding the debt. As such, the court could take the affidavit and was not required to hold an evidentiary hearing.
This is an important case in Connecticut in that it strengthens lenders’ ability to prosecute foreclosure actions as it removes the issue of small errors concerning compliance with a PSA. Further, this decision serves as a reminder to judges that it is acceptable to follow the rules and decline borrowers’ attempts to make extra work for the court and plaintiffs.
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